Approximately 43.6 million borrowers in the United States have federal student loan debt with the average student loan debt balance of $37,718. (Photo by Cameron Enomoto)

By Cameron Enomoto | Staff Writer

On January 12, President Biden announced a plan to cancel some student loan balances under $12,000. Beginning this month, February, people who borrowed below $12,000 in federal student loans and have paid their loans for over 10 years will have the remaining balance canceled upon enrollment in the Saving on a Valuable Education Plan (SAVE).

While President Biden’s initiative to cancel balances on borrowers’ debt is helpful for those individuals, the larger issue of student loans is the predatory interest rates. The total student loan debt in the United States is $1.766 trillion, with outstanding federal loan balances accounting for 93.1% of all student loan debt.

When it comes to student loans and debt, there are many reasons why people amass a large balance. First off, college isn’t cheap. According to the Education Data Initiative, the average student will pay $104,108 at a public in-state college over four years. Out-of-state students pay roughly $108,364 and students who attend private schools will pay $223,360 over four years.

For non-traditional students who are returning to college after a break, student loans may be necessary due to other responsibilities like familial obligations and living expenses that make covering tuition and fees challenging. Even if students receive financial aid or scholarships, the amount awarded may not be enough to cover all educational expenses. 

One of the main reasons I chose to begin my higher education journey here at Kapiʻolani Community College is because I would be less likely to accrue debt in the form of student loans. While it was a difficult decision to make since the majority of my peers were moving away to attend a four-year university on the mainland or abroad, I’m glad that I chose the path I did.

Now, after three years of community college and working four part-time jobs, I have no student loans and I will be transferring to UH Mānoa in the fall to complete my bachelor’s in Social Work. However, it’s a different story for students attending schools with much steeper tuition rates.

A student who was born and raised in Hawaiʻi and is now a third-year student at Yale University had to take out student loans to cover the cost of tuition and other expenses. The average cost of tuition before aid at Yale is $85,120 per year. KCC’s tuition is $3,144 per year for residents.  The student estimates owing above the average student loan debt balance of $37,718.

“My parents took out student loans for me,” said the student, who asked to remain anonymous. “Every time I log into FAFSA, I see it and get stressed out. I feel bad and don’t know how they’re going to pay it off or how I will help them pay it off.”

Other students rely on financial support besides student loans to pay for their education. Arden Ching, a graduate from the University of California, Irvine, completed her BA in Psychological Sciences and Criminology, Law & Society in the fall of 2023 with help from her family.

“I’m privileged since my grandparents and great-grandparents set aside a lot of money for education specifically,” said Ching, who is also from Hawaiʻi. “I had some scholarships too that helped because out-of-state is expensive.”  

The average interest rate for student loans is 5.8%, though rates differ based on whether the student is pursuing an undergraduate or graduate degree and if the loans are federal or private. The interest rate for federal unsubsidized and subsidized loans is 5.50%. Federal unsubsidized loans for graduate and professional students have an interest rate of 7.05%. With private loans, interest rates can reach up to 16.99% and are typically in the double digits.

In addition to high interest rates, some student loans might have variable interest rates which can change over time based on the current market conditions. There are also some private loans and unsubsidized federal loans that capitalize interest during deferment, leading to higher debt overall. Lastly, some student loans may not have caps on interest rates so they will continue to rise and make it challenging for borrowers.

Ultimately, students and their families need to consider the risks and challenges that come with student loans. While it can be a way to finance education and career goals, exploring alternatives and researching options thoroughly can help minimize reliance on loans and help borrowers make informed decisions about their debt and how to manage it properly.